Global spending on the digital transformation (DX) of business practices, products, and organisations is forecast to reach US$1.8 trillion in 2022, an increase of 17.6% over 2021. According to the latest IDC Worldwide Digital Transformation Spending Guide, digital transformation spending will sustain this pace of growth over the 2022-2026 forecast period with a five-year compound annual growth rate (CAGR) of 16.6%.
Craig Simpson, a senior research manager for Customer Insights & Analysis at IDC, anticipates a minor slowdown during the pandemic period but says as organisations accelerate their pursuit of a digital-first strategy, they will channel these investments into both internal operations and external direct engagement.
"The investments in internal operations are largely focused on improving efficiency and resilience while customer experience transformation has become a DX priority for many companies," he adds.
Where investments will go first
Operational investments stand out among the 51 strategic priorities included in the DX Spending Guide. The DX priorities that will see the largest investment in 2022 include back office support and infrastructure, smart manufacturing, and digital supply chain optimisation.
Together, these three investment areas will represent more than US$620 billion in DX spending this year. Other operational priorities that will see significant investments in 2022 include connected assets, facility management, and operationalising data and information.
Customer experience investments, such as omni-experience engagement, and omni-channel commerce, will account for more than US$300 billion in DX spending in 2022.
The DX strategic priorities that will experience the fastest spending growth over the five-year forecast include narrowly focused priorities like frictionless insurance (27.4% CAGR) and legal (27.0% CAGR) as well as operational priorities such as enterprise and resource management (26.0% CAGR).
Industry view
From an industry perspective, the discrete and process manufacturing industries will account for nearly 30% of worldwide DX spending this year, followed by the professional services and retail industries. The utilities and banking industries will also see DX spending of more than $100 million this year.
Meanwhile, the financial services sector will deliver the fastest DX spending growth over the 2022-2026 forecast period, with the securities and investment services, insurance, and banking industries all forecast to have five-year CAGRs of 19% or more.
